Deutsche Bank Closes Catalyst Call on International Flavors & Fragrances (IFF)
Deutsche Bank analyst David Begleiter reiterated a Buy rating and $90.00 price target on International Flavors & Fragrances (NYSE: IFF)
The analyst comments "We are closing our short-term Buy catalyst call on IFF as the catalyst events we identified (the sale of Pharma Solutions for $3.1B or a formal announcement that a sale process for Pharma Solutions was underway in conjunction with the Q4 earnings release) did not occur. Instead, IFF announced that it has decided to cut its quarterly dividend (of $0.80/share) by 50% (to $0.40/share) to help enable faster deleveraging of its balance sheet. While disappointing, IFF stated on the Q4 earnings conference call that it "continues to work on additional divestitures" and remains confident it will achieve its net debt-to-EBITDA target of <3x (versus 4.7x at 12/30/23). Although IFF would not commit to achieving this target by year-end '24, we still believe a sale of Pharma Solutions will likely be announced in the near future as portfolio optimization actions to improve the balance sheet are the top priority for new CEO Erik Fyrwald. With deleveraging underway, actions being taken to improve the underlying business, consumer demand trending favorably and valuation an attractive 14.5x '24E EBITDA versus 17.1x for Ingredients peers (with 1x = $8/shr, or 10% of the current share price), we reiterate our Buy rating."
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Shares of International Flavors & Fragrances closed at $76.78 yesterday.